Los Angeles

Hahn Speaks Out on Gift

Politics: Mayor says he returned film agency's donation because it became a distraction.

Mayor James K. Hahn said Wednesday his return of $25,000 he solicited from a film-permitting agency for his anti-secession campaign is not an admission of impropriety, but that the city attorney should clarify whether the agency is barred from making political donations.

Hollywood secessionists sent a letter Wednesday to City Atty. Rocky Delgadillo asking that he disqualify Hahn from any review of spending by the Entertainment Industry Development Corp. because the $25,000 contribution posed a conflict of interest.

The letter, signed by Alejandro Lopez, a member of the elected Central Hollywood Neighborhood Council, also called on Hahn to return $2,000 that EIDC gave his mayoral campaign.

Lopez wrote that Hahn and EIDC Chairman Frank Scherma, whose company landed a $341,000 contract with the agency, have "taken money illegally from the public."

Lopez said Scherma should also be disqualified from any financial review of EIDC.

In his first public comments on the issue since he returned the $25,000, Hahn said on KFWB radio's "Ask the Mayor" program that he did not consider EIDC a public agency handling public funds, though it collects film permit fees for the city.

"I don't think there was anything wrong taking contributions, because EIDC is not part of city government," Hahn said. "It's a separate corporation set up to help expedite film permits."

Hahn said he gave the money back because the EIDC controversy had become a distraction to the anti-secession campaign.

The mayor also said Delgadillo's office should determine whether EIDC is free to make political contributions.

The office said it is researching the matter.

"We ought to get this sorted out," Hahn said.

The district attorney's office is investigating EIDC's spending practices. Hahn said he welcomed the investigation.

The mayor is leading the campaign against the San Fernando Valley and Hollywood secession measures on the Nov. 5 ballot.

Meanwhile, production accountants and location managers on Wednesday criticized EIDC for its failure to promptly refund unused portions of deposits they make for city services used during television and film productions. They said they have been complaining about the tardy refunds for years.

Sometimes, they said, it takes months, even years for EIDC to return the money.

"It's very frustrating," said Victoria Zamora, production accountant with Oberman, Tivoli, Miller & Pickert, whose clients include television, film and commercial producers. "The EIDC says that they're backed up with paperwork."

Ande Hecht, president and co-owner of the accounting firm the Audit Trail, said, "It's always taken a long time ... it's not in tune with how we [in the film industry] work." She said it especially hurts low-budget productions, where "every dime counts."

Another accounting firm said despite regular calls to EIDC, it is still waiting for deposits from a 1999 project.

EIDC acknowledged it can take from a few months to years to refund deposits.

"It happens when we haven't received actual charges from the city," said Sally Lee, the EIDC treasurer. She said city officials are sometimes late in receiving information from their own employees on how much money the production companies are due. Interest on those deposits is reported on financial statements as income by EIDC.

Last year, EIDC said it returned $181,451.55 for 86 projects. So far this year, the agency has returned $139,034.05 for 63 projects.

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Times staff writers Anita M. Busch and Steve Berry contributed to this report.